NEW DELHI: Automobile industry body SIAM has said custom duties on fully imported cars and engines must not be lowered as is being proposed in the ongoing free trade negotiations between India and EU, stating that such a step will severely damage the sector.
While releasing a ‘White Paper’ on the proposed India-EU FTA and its possible implications on the automobile sector if it’s included, Society of Indian Automobile Manufacturers (SIAM) said “it has to be avoided at all cost”.
“Opening the CBUs to imports/lowering import duties under the EU FTA is a retrograde step and will have a severely damaging and long term irreversible effect in several ways for the Indian economy, auto industry and consumer at large,” the paper said.
The list of tariff lines, comprising completely built unit (CBU) and engines, should be kept in India’s Negative List in all FTAs, it added.
“The Government of India has consistently maintained this policy in all FTAs, including FTAs with Japan, ASEAN, South Korea etc. These items have also been identified in the Automotive Mission Plan 2006-2016. We would like to reiterate that these tariff lines should be kept in India’s Negative List under India-EU FTA,” SIAM said.
SIAM further said reduction of tariff on CBUs under India-EU FTA will be a complete reversal of the policy of high tariffs to force investment, local manufacturing, local value addition and local employment.
“This will jeopardize the entire Automotive Mission Plan 2006-2016 targets since already some manufacturers have started withholding investment because there is no clarity with respect to tariff reduction in this sector,” it added.
The industry body also pointed out that EU is a declining market in terms of automotive exports, while India is a rapidly growing market. Therefore, the gains through this FTA will only be for EU and not for India.
“SIAM is deeply concerned with the way India-EU FTA negotiations are taking place. From the beginning of the negotiations, EU had said that India-EU FTA cannot be concluded without auto CBUs being included in the FTA.
“India seems to have bowed down to this condition by EU as it is still discussing with EU despite such threat. It is understood that negotiations on reducing the import tariffs on auto CBUs are in an advanced stage,” SIAM said.
Besides, SIAM said India-EU FTA has become more dangerous with the introduction of the concept of ‘Non-New Goods’.
“EU is demanding that India cannot ‘apply to non-new goods requirements or other measures, including enforcement measures, which are more restrictive than to new goods.
Non-new goods shall be understood to include notably used and re-manufactured goods’,” it added. -PTI
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